2015 UAW-FORD. National Negotiations Media Fact Book NATIONAL NEGOTIATIONS MEDIA FACT BOOK

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1 National Negotiations Media Fact Book 1

2 Table of Contents I. Ford Motor Company Vital Statistics Hourly Employment and Payroll Costs... 5 Hourly Labor Cost... 6 Profile Typical Hourly Employees... 8 II. Company Benefits (Traditional Employees) Healthcare Benefits... 9 Group Life and Disability Insurance Pension Plan Tax-Efficient Savings Plan Income Security Employment Security III. Company Benefits (Entry-Level Employees) Healthcare Benefits Group Life and Disability Insurance Tax-Efficient Savings Plan Income Security IV. Other Company Benefits Legal Services Plan Profit Sharing Plan Ford Interest Advantage New Vehicle Purchase/Lease and Finance V. UAW-Ford Special Programs for Employees Diversity, Education, Development and Training. 32 Employee Support Services Program Health and Safety Best-in-Class Quality Program VI. Negotiations National Negotiations Local Negotiations VII. Appendix Facilities and UAW Representation by State Highlights of Prior Negotiations Traditional Base Wage Increases Entry-Level Rate Increases Paid Time Off Alternative Work Schedule Premium Payments... 58

3 Members of the Media This document is designed to assist members of the news media in covering the 2015 UAW-Ford national contract negotiations. It provides background material on Ford Motor Company (through year-end 2014), its collective bargaining agreement with the UAW and subjects that may be discussed during negotiations. It includes a number of charts and graphs that can be reproduced to illustrate company and industry trends. For further information about Ford s business and financial condition, please refer to our company s Annual Report for the year ended Dec. 31, 2014 and to subsequent filings with the SEC. Kelli Felker Manager, Manufacturing & Labor Communications kfelker1@ford.com 3 Mike Moran Global News Manager, Communications mmoran@ford.com Karl Henkel Ford Communications khenkel1@ford.com

4 Ford Motor Company Vital Statistics Plants and Other Facilities Ford Motor Company's hourly UAW-represented employees work in a number of plants, parts distribution centers, research and engineering sites and other facilities across the United States. Assembly Plants (Vehicle Operations) The company's U.S. assembly plants receive parts and components from suppliers, both within and outside the company, and assemble them into finished cars and trucks. (See Appendix page 39 for more detailed information about Ford Motor Company s North American Assembly and Manufacturing plants.) Manufacturing Plants (Casting, Stamping, Powertrain Operations) The company's U.S. manufacturing plants manufacture, fabricate and ship parts or component assemblies to the assembly plants or parts distribution centers. Automotive Parts Distribution Centers U.S. facilities receive inventory and store automotive parts for distribution to dealers and other distributors. Research and Engineering Facilities Ford s research and engineering facilities conduct advanced research in new vehicle concepts, powertrains and vehicle systems. Research and development of manufacturing processes, materials, environmental controls, polymers and catalysts are also conducted at these facilities. New methods of recycling, alternative fuel vehicles, voice-activated technologies and leading safety initiatives are just a few items that are evaluated at these facilities. 4

5 Hourly Employment and Payroll Costs There are four levels of hourly employees: Traditional Employees hired or rehired prior to Nov. 19, 2007 Entry-Level Employees hired or rehired on or after Nov. 19, 2007 Long-Term Supplemental Employees hired to supplement the workforce for a long term assignment that is temporary in nature Temporary Part-Time Employees hired to supplement the workforce who work any two days during a week and have the potential of working additional days for which full-time employees receive premium pay as long as no full-time employee is displaced The below chart traces Ford's U.S. hourly employment levels during the last 10 years. These figures represent the average number of UAW-represented employees covered by the collective bargaining agreement on the employment roll each year from 2004 to During the last decade, average hourly employment levels peaked at 88,386 in 2004 and have decreased during the last several years to 48,366 in Average Number of UAW-Represented Hourly Employees $100,000 $90,000 $80,000 $70,000 88,386 84,308 $60,000 77,453 $50,000 58,104 $40,000 $30,000 47,638 40,863 40,398 40, ,607 45,631 48,366 $20,000 $10,000 $ Source: Ford data

6 Hourly Payroll The below chart illustrates Ford s U.S. hourly payroll cost which excludes healthcare, pension, and other benefits from 2004 through 2014, the most recent data available. Since 2004, hourly payroll costs have decreased 49 percent from $6.7 billion to $3.4 billion, which is explained by a decrease in employment offset by an increase in wages. Since 2011, hourly payroll costs have remained consistent despite increasing employment Ford has created more than 15,000 hourly jobs since 2011 and steady wages. Data is shown through 2014 the most recent annual data available. Total U.S. Hourly Payroll Cost Billions $8.0 $8.0 $7.0 $7.0 $6.0 $6.0 $5.0 $5.0 $4.0 $4.0 $6.7 $6.0 $5.3 $3.0 $3.0 $4.4 $3.2 $2.0 $2.0 $1.0 $1.0 $0 $ $2.6 $2.9 $3.3 $3.2 $ $ Source: Ford data Hourly Labor Cost Labor cost can be defined and measured in a number of ways. One of the most meaningful measures is the total average hourly cost to the company per hour worked. This includes (1) all the dollars paid to employees, (2) the cost of contractual benefits for employees, and (3) the cost of statutory payments, such as Social Security and workers compensation all calculated on the basis of hours worked by employees. The below graph shows that during the 2005 through 2014 period, Ford's total average hourly cost per hour worked decreased 13.2 percent, from $64.91 to $56.33 per hour. U.S. Hourly Labor Costs $80.00 $70.00 $60.00 $50.00 $64.91 $70.51 $68.35 $69.50 $60.28 $ $64.35 $61.01 $ $56.33 $40.00 $30.00 $20.00 $10.00 $ Source: Ford data

7 U.S. Auto Industry Hourly Labor Costs (estimated) We need to continue to close the labor cost gap with our foreign competitors in the U.S. According to the Center for Automotive Research, Ford has about a $10 gap to the transplants ($57 vs. $47), which they can leverage in their vehicle pricing, research and development costs, etc. $70 $58 $60 $57 $50 $50 $47 $40 Ford $30 Transplants $20 $10 $ Current (estimate) Source: Center for Automotive Research Hourly labor costs and entry-level workers for U.S. automakers We presently have about 52,000 UAW employees including 15,115 full-time entry level hourly employees, which equates to about 29 percent entry level. Our contract with the UAW allows for 20 percent plus approved insourcing actions and staffing at our Rawsonville and Sterling plants. 50% $70 $60 $50 $57 $58 40% $47 35% 30% $40 Ford $30 GM 20% $20 Chrysler 15% 25% 29% 20% 5% 0% $0 Current hourly labor rate Source: Art Schwartz, Labor and Economics Associates Ford GM Chrysler 10% $ % 45% Current percentage of entry-level workers

8 Profile Typical Hourly Employees The below section profiles the average Ford U.S. hourly employee; it is a composite of production and skilled wages based on the average number of employees and their hours paid in Base Hourly Rate Gross Weekly Earnings (Based on a 40-hour straight-time week) Traditional Skilled Traditional Non-Skilled Entry-Level Non-Skilled $32.80 $28.69 $16.80 $1, 311 $1,148 $672 Paid Time Off In 2014, the above employees were entitled to the following paid time off: Vacation (average)* 20 days Holidays 16 days Total Paid Time Off 36 days * Note Vacation allocation is based on years of service. Additional Benefits In addition to the benefits, paid time off and compensation already described, an employee may be eligible for the following benefits: Healthcare Benefits, Hospital-Surgical-Medical-Drug-Hearing Aids Dental Coverage Vision Coverage Group Life & Disability Insurance Pension Tax Efficient Savings Plan for Hourly Employees (TESPHE) (401K) Income Security Employment Security Layoff Benefits Legal Services Profit Sharing Ford Interest Advantage Vehicle Purchase Program For descriptions of these programs, see the Company Benefits section, page 9. 8

9 Company Benefits (Traditional Employees) Healthcare Benefits Healthcare Benefits Ford provides eligible Traditional employees and their eligible dependents with a comprehensive package of healthcare coverage, including: Hospital-Surgical-Medical Prescription Drug Dental Vision Hearing Aids The breakdown of each component of Ford s healthcare spend is below: Hourly Active 2014 Healthcare Expenses Vision 0.4% Other/HRA 0.2% Dental 6.5% Prescription Drugs 19.0% Source: Ford data 9 Medical 73.9%

10 Annual Healthcare Expense Per Ford Hourly Employee The magnitude and escalation of healthcare costs can be viewed in terms of the expense per employee, as the below chart displays from 1990 to Average Annual Healthcare Expense Per Ford Hourly Employee $16,000 $14,000 $13,000 $13,500 $14,000 $14, $14,800 $12,000 $10,000 $8,400 $8,000 $6,000 $4,600 $4,000 $2,000 $0 1990* 2000* 2014 * Includes Ford Hourly Actives and Retirees. Ford Hourly Retirees were transferred to the UAW VEBA, effective Jan. 1, Source: Ford data Magnitude of expense: the average annual Ford hourly health care expense per employee increased to approximately $14,800 in Retiree Healthcare Benefits VEBA Effective Dec. 31, 2009, Ford fully settled its UAW postretirement healthcare obligation. On Dec. 31, 2009, Ford contributed $14.8 billion of assets to the UAW VEBA Trust. In exchange for these assets, Ford irrevocably transferred its obligation to provide retiree healthcare for eligible active and retired UAW-Ford hourly employees and their eligible spouses, surviving spouses and dependents to the UAW VEBA Trust. Impact of the Patient Protection and Affordable Care Act (ACA) Since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010, the legislation has been phased in during the last four to five years, with elements still coming into realization through As of 2014, most ACA requirements have already been implemented, including: 2011 Added coverage for all dependents up to age 26; expanded additional coverage requirements 2012 Expanded coverage of preventive care without participant cost sharing; started reporting healthcare cost on W2s and a standard summary for plan participants 2013 Expanded preventive care to include eight new women s services; began paying Patient-Centered Outcomes Research Institute (PCORI) fee 2014 Changed waiting period for medical coverage from seven months to 90 days for Entry-Level employees; added coverage for clinical trials; began paying fee for transitional reinsurance program The cost of these additional coverages and fees has been more than $83 million from 2011 to 2014 and is expected to continue to grow. 10

11 Looking Ahead To 2018 The ACA Excise Tax The 40 percent excise tax on high cost coverage, including medical, health Flexible Spending Account (FSA) contributions, onsite medical clinics, and employer contributions to Health Savings Account (HSA), will have an initial cap set at $10,200/single and $27,500/family starting in Without some intervention, Ford s excise tax for hourly employees will grow larger over time. Traditional Coverage Cost Compared To The Single Cap $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Federal Cap Ford Traditional Projected Source: Ford data Alternative Healthcare Programs In some parts of the country, employees have the option to enroll in an alternative healthcare plan or Health Maintenance Organization (HMO), in lieu of traditional coverage. HMO programs are intended to provide broader benefits for members in a managed care setting at a lower cost. The following chart indicates the percentage of employees enrolled in HMO or PPO plans as of March 2015: Enrollment HMOs* and Blue Preferred Plus (BPP) National PPO 55% 45% 100% *13 HMOs deleted during the 2011 contract period while 15 HMOs and 1 alternative plan (BPP) continue to be offered 11

12 Hospital-Surgical-Medical-Hearing Aid Traditional Employees Coverage: Traditional Hospital-Surgical-Medical-Hearing Aid coverage is provided through a National PPO Plan with Blue Cross Blue Shield of Michigan for eligible employees and their eligible dependents. Benefits: Hospital-Surgical-Medical-Hearing Aid benefits for active employees under the National PPO include coverage for up to 365 days of hospital care at no charge for approved admissions in a semiprivate room, surgical and in-hospital medical care reimbursed on the basis of physicians' maximum allowed amount, and coverage for medical emergencies and emergency first aid. Other important benefits include prosthetic appliances; durable medical equipment; mental health and substance use disorder care; outpatient physical therapy and hearing aid services for audiometric exams; hearing aid evaluation tests and hearing aids. Hospital-Surgical-Medical benefits are subject to the cost sharing amounts as outlined below. National PPO Plan Monthly Healthcare Contributions None Annual Deductibles (In and out-of-network) None Co-Insurance None for covered services obtained in-network 10% for covered services obtained out-of-network Co-Payments $20 Office Visit $50 Urgent Care $100 Emergency Room Services Out-of-Pocket Limitation* In-Network Single $0 Multi-Party $0 Out-of-Network $250 $500 *Includes deductibles & co-insurance 12

13 Prescription Drug Traditional Coverage: Prescription drug coverage through Express Scripts is provided for eligible employees and their dependents enrolled in the National PPO (traditional plan through Blue Cross Blue Shield). Benefits: Prescription drugs for active employees provided through in-network pharmacies are subject to the copays below. National PPO Plan Generic Brand Retail $5 $12 Home Delivery $11 $17 Dental Traditional Coverage: Nationwide dental coverage for employees and their eligible dependents is provided through Delta Dental of Michigan. Alternative dental plan coverage also is offered in nine states in lieu of traditional coverage. Benefits: Dental benefits received by a Delta Dental Preferred Provider Organization (PPO) dentist include diagnostic and preventive services, X-rays, fillings and crown repair, endodontic services, extractions, etc. at 100 percent; basic services, such as, occlusal guards/adjustments, dental surgery and major restorative at 90 percent; major services (prosthodontic services) at 70 percent; orthodontic services at 60 percent for dependents to age 19. The maximum annual benefit per member is $1,850 for non-orthodontic services, with a separate maximum lifetime benefit of $2,200 for orthodontic services. Vision Traditional Coverage: Eligible employees and their dependents enrolled in a healthcare plan that does not include vision care coverage are provided coverage nationwide by SVS Vision Inc. Benefits: Covered services from participating providers include complete vision examination, frame and lenses (including bifocal, trifocal, photochromic/transition and special lenses) and contact lenses. Benefit payments to nonparticipating providers are for lesser amounts. 13

14 Company Benefits (Traditional Employees) Group Life and Disability Insurance (GL&DI) Group Life and Disability Insurance (GL&DI) Ford provides hourly employees a comprehensive package of life and disability insurance benefits based on wage rates on the last day worked. Coverage includes: Life Insurance Accidental Death and Dismemberment coverage Accident and Sickness benefits (A&S) Extended Disability Benefits (EDB) In addition, the following benefits are provided: Safety Belt User Benefit ($15,000) Survivor Income Benefit ($700 per month) Also available are several optional employee-paid plans: Dependent Group Life Insurance provides spouse/same-sex Domestic Partner coverage ($5,000 to $150,000) and child(ren) coverage ($2,000 to $60,000) Employee Optional Life Insurance offers amounts between $10,000 and $500,000 Optional Accident Insurance is offered for both the employee and family. Coverage may be purchased in units of $10,000 up to $500,000. If family coverage is elected, the spouse/same-sex Domestic Partner is covered for an amount equal to 50 percent of the employee's coverage, and each child is covered for 10 percent of the employee s coverage Employees with less than 10 years of seniority also may elect to purchase the Optional Long Term Disability Plan The following summarizes company-paid GL&DI benefits for current hourly employees as demonstrated by the average hourly employees: Benefit Benefit Amount (Range) Major Assembler Tool & Die Maker Active Life Insurance pays a benefit to employee s beneficiary when the employee dies $32,500-$86,500 $66,000 $75,000 Active life insurance amount continues until first of 18th month; then reduction formula applies. Same Same Retiree Life Insurance* pays a benefit to retired employee's beneficiary * UAW-Ford Retirement Plan eligibility is applicable 14

15 Accidental Death and Dismemberment Insurance pays a benefit, if the employee suffers a covered dismemberment or dies as the result of an accident $16,250-$43,250 $33,000 $37,500 Survivor Income Benefit provides a monthly income to the employee s eligible survivors after the employee dies $700 per month ($375 if eligible for unreduced Social Security benefits) Same Same Accident and Sickness Insurance pays a weekly benefit for up to 52 weeks, if the employee is injured or sick and unable to work $340-$900 per week $690 per week $785 per week $1,250-$3,320 per month (less than 10 years) $2,550 per month (less than 10 years) $2,890 per month (less than 10 years) $1,370-$3,645 per month (10 or more years) $2,795 per month (10 or more years) $3,170 per month (10 or more years) Extended Disability Benefit provides a monthly benefit (based on service) after Accident and Sickness insurance benefits end, if the employee is totally disabled and unable to work Benefit Benefit Amount/Range (All Employees) Safety Belt User Benefit Program pays a $15,000 benefit, if the employee or another covered participant dies as a result of an automobile accident while wearing a qualified passenger restraint $15,000 Optional Group Life Insurance employee may select varying amounts of coverage for him/herself and/or covered dependents Employee $10,000-$500,000 Spouse $5,000-$150,000 Each Child $2,000-$60,000 Optional Accident Insurance employee may select varying amounts of coverage for him/herself and/or covered dependents Employee - $10,000-$500,000 Spouse/Same-Sex Domestic Partner 50% of employee's coverage Each Child - 10% of employee s coverage Retiree Life Coverage Accidental Death & Dismemberment coverage ends effective the first of the 18th month following retirement. Retirees may elect to continue optional employee paid coverages in retirement for as long as Ford-paid life insurance remains in force. 15

16 Company Benefits (Traditional Employees) Pension Plan Ford-UAW Retirement Plan Funded entirely by company contributions Adopted in 1949 Effective March 1, 1950 First negotiated pension plan for hourly employees in the auto industry Provided a maximum combined monthly benefit (benefit class code D retirement, including Social Security) for a normal retirement at 30 years of company service: o of $100 for a retirement in 1950 o of $3,791 for a retirement in 2014 Significant improvements to the plan over the years include: 16 Supplemental allowances payable to those retiring prior to attaining eligibility for Social Security benefits Payment of survivor s benefits to spouses of participants Special Early retirement benefits payable for retirement under mutually satisfactory conditions Disability pension benefits payable to employees under age 65 with at least 10 years of service who become totally and permanently disabled or unable to perform any work at the plant or plants at which they have seniority A deferred vested benefit payable at 65, or earlier on a reduced basis, to former employees who had 10 or more years of creditable service (or Employee Retirement Income Security Act service) at the time they broke seniority with the company (five years, if employed after Jan. 1, 1989)

17 Persons Receiving Ford-UAW Retirement Plan Benefits Compared with Active Traditional Hourly Employees The ratio of the number of hourly retirees and surviving spouses receiving benefits to active Traditional hourly employees has changed from 1-to-62 in 1950 (when only 1,800 people were receiving plan benefits with 111,400 employees on-roll), to a ratio of 3-to-1 at year-end 2014 (with approximately 124,300 people receiving plan benefits and approximately 37,300 Traditional employees on-roll.) The below graph shows the number of people receiving plan benefits and the number of active Traditional employees each year. Persons Receiving Ford-UAW Retirement Benefits Compared with Active Traditional Employees $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 Persons Receiving Retirement Benefits Source: Ford data Active Traditional Employees 37

18 Monthly Pension Benefits: Normal & Regular-Early Retirements for a 30-Year Hourly Employee1 The actual dollar amount of benefits payable under the plan has grown since the plan s inception. The graph below compares the dollar amount of historical monthly benefits payable under the plan for retirements commencing in the years shown for both Normal and Regular-Early 30 and out benefits.2 The calculation of benefits for Normal Retirement assumes the employee retires with 30 years of service at age 65. Benefits for Regular-Early retirements assume the employee was age 60 with 30 years of service at retirement. Monthly Pension Benefits Normal & Regular-Early Retirements for a 30-Year Employee $3,500 $3,170 $3,000 Regular Early $2,500 $2,000 $1,614 Normal $1,500 $1,000 $500 $68 $42 $ As of year-end The $3,170 Regular-Early monthly pension benefit (benefit class code B retirement, including a supplemental allowance) as shown is payable until age 62 and one month, or if earlier, when eligible for an unreduced Social Security benefit. At age 62 and one month, the monthly benefit payable under the plan for the individual in this example would be recalculated to $1,614. (Benefits exclude survivorship option cost.) Source: Ford data 18

19 Annual Pension Benefit Payments The graph below shows the growth in annual benefit payments. In 1950, the plan paid out approximately $1 million in benefits to 1,800 retirees. In 2014, a total of $1.8 billion was paid to an average of 124,300 retirees and surviving spouses. Benefits under the plan are provided through a trust funded by company contributions. The value of trust fund assets as of Jan. 1, 2014 was $23.4 billion. On an accounting basis, the market value of plan assets was 97 percent of the accumulated benefit obligation at beginning of year Through 2014, a total of $38.3 billion has been paid to all past and current retirees and surviving spouses. Annual Pension Benefit Payments $2, $1,791 Millions $2, $1, $1, $ $1 $ Source: Ford data

20 Company Benefits (Traditional Employees) Tax-Efficient Savings Plan for Hourly Employees (TESPHE) Tax-Efficient Savings Plan for Hourly Employees (TESPHE) The Tax-Efficient Savings Plan for Hourly Employees was negotiated in Pursuant to the plan, seniority employees may save up to 50 percent of their regular pay (on a combined pre-tax, Roth and after-tax basis) and up to 100 percent of any profit share payments as pre-tax or Roth contributions. Combined pre-tax and Roth contributions are subject to a maximum limit of $18,000 for 2015, which may increase in subsequent years. Employees age 50 and above can make additional pre-tax and Roth catch-up contributions subject to a maximum contribution limit of $6,000 for 2015, which may also increase in subsequent years. Investment Options Employees have a choice of 21 investment options, including nine target-date funds and an additional 12 funds, including a Company stock fund. Transfers of account assets and changes in investment elections for future contributions may be made daily with certain restrictions imposed by the individual funds. Withdrawing Assets Under existing tax laws, employees cannot withdraw pre-tax or Roth assets from their TESPHE account before age 59½, unless they have a financial hardship or request a plan loan. After-tax assets and associated earnings may be withdrawn at any time. After termination of employment (including retirement), employees may withdraw assets, transfer assets to another employer's qualified plan, or deposit assets into their own Individual Retirement Account (IRA). Plan Participation As of Dec. 31, 2014, approximately 63 percent of eligible Ford Traditional employees participated in the plan. Total assets in TESPHE as of that date totaled approximately $4.6 billion. 20

21 Company Benefits (Traditional Employees) Income Security Ford-UAW Supplemental Unemployment Benefit (SUB) Plan Negotiated in 1955, implemented in 1956 Provides a significant measure of income during layoff $3.1 billion in benefits paid since 1956 Types of SUB Benefits Regular Benefits generally for full weeks of layoff of an amount that, when added to state unemployment compensation, equals 74 percent of Weekly Before-Tax Pay. Duration of Regular Benefits (based on the 2011 Collective Bargaining Agreement, subject to seniority) during an indefinite layoff: o o o o Less than 10 years seniority = maximum of 26 weeks of SUB Regular Benefits At least 10 years but less than 20 years of seniority = maximum of 39 weeks of SUB Regular Benefits 20 years or more of seniority = maximum of 52 weeks of SUB Regular Benefits For the length of a qualifying temporary layoff TAP (Transition Assistance Plan) Benefits are for an eligible employee on a qualified layoff who exhausts SUB Regular Benefits. The employee shall be eligible for subsequent TAP weekly benefits in the amount of 50 percent of the employee's gross weekly wages, based on a 40-hour week, with duration of eligibility based on seniority as follows during the life of the 2011 UAW-Ford Collective Bargaining Agreement: o Less than 10 years seniority = maximum of 26 weeks of TAP o At least 10 years but less than 20 years of seniority = maximum of 39 weeks of TAP o 20 years or more of seniority = maximum of 52 weeks of TAP Prior to becoming eligible for TAP benefits, an employee may elect to opt out of TAP benefits and receive a lump-sum cash payment of $10,000 plus the maximum TAP benefit for which the employee would otherwise be eligible. In doing so, the employee shall forfeit eligibility for weekly TAP benefit payments and also forfeits all recall rights. 21 Automatic Short Week Benefits: If fewer than 40 hours are available for an employee, a layoff amount equal to 80 percent of the employee s base hourly rate will be paid for the hours of layoff. Separation Payment is based on a scheduled number of hours of base pay and determined by the employee s seniority. It is paid in lieu of future SUB benefits.

22 Company Benefits (Traditional Employees) Employment Security Job Security Program (JSP) The Job Security Program (JSP), known prior to the 2007 Agreement as the Guaranteed Employment Numbers (GEN) program, was first negotiated as the industry pattern at Ford in The program was designed to provide continued employment for employees who might otherwise be laid off and guaranteed that no eligible employee would be laid off except for specific reasons, such as reduced customer demand, acts of God or other conditions beyond control of management, plant rearrangement and change-over, or conclusion of known temporary assignments. During the 2007 negotiations, the parties agreed to limit the amount of time an employee could remain in Protected Status. Protected Status is a job offer component for available openings in and out-of-zone including a provision that could lead to an employee being placed on inactive status with no Company-provided income or benefits for declining a certain number of job offers over a period of time. In March 2009, market and economic conditions led to contractual modifications via special agreement between the Company and the UAW. The parties agreed to suspend the contractual provisions that limited the Company s ability to lay off employees. The Agreement also suspended Protected Status under the Job Security Program (e.g., the Jobs Bank, as it was commonly referred to externally.) Employees who were in Protected Status as of March 16, 2009 were placed on indefinite layoff, as were employees subsequently affected by workforce reduction events that otherwise would have resulted in their being placed in Protected Status. While on indefinite layoff, these employees would be: Eligible to apply for available job placement opportunities Potentially subject to mandatory placement within their Preferential Placement zone Extended a job offer for out-of-zone opportunities that remained unfilled In addition to the above modifications, the outcome of the 2011 Agreement has further allowed the Job Security Program to refocus on providing job placement opportunities and limited, affordable income security for employees impacted by layoff. Key provisions of the current program in effect include: Local and National Job Security committees that jointly oversee administration of the Job Security Program provisions Limited, redefined return home rights, especially following voluntary movement during the term of the 2011 Agreement Placement hierarchy provisions which allow for mandatory in-zone placement of surplus employees, and out-of-zone job offers. An employee who is extended an offer for an outof-zone job opportunity must either: Accept the job offer Decline the job offer and be placed on inactive status with no Company-provided income or benefits (but remain eligible for additional job opportunities for a period of time equal to his or her seniority or 18 months, whichever is greater) Bump the least-senior employee within the Preferential Placement Zone experiencing surplus (in which case the least-senior employee must elect the first or second option above) A separate skilled trades placement hierarchy that enables skilled manpower needs to be filled more expeditiously 22

23 Preferential Placement/Return Home Arrangements First initiated at Ford in 1982, the Preferential Placement Program provides laid-off seniority employees the opportunity to transfer to available work at other locations. Under the return home provisions, certain eligible employees may apply to return home to their home location as opportunities permit. The scope and applicability of this Appendix has been redefined with the 2011 Agreement. There has been significant emphasis in recent bargaining on providing placement opportunities for surplus employees while restricting movement of active employees to ease the workforce churn and administrative burden on the manufacturing locations. 23

24 Company Benefits (Entry-Level Employees) Healthcare Benefits Healthcare Benefits Ford provides hourly Entry-Level employees with hospital, surgical, medical, drug, hearing aid, vision and dental coverage. Entry-Level employees will be eligible for a modified version of the National PPO Plan 90 days from their date of hire. Hospital-Surgical-Medical benefits are subject to the cost sharing amounts as outlined below. Modified National PPO Plan Employee Contributions None Annual Deductible In-Network Single $300 Family $600 Co-Insurance In-Network Out-of-Network Out-of-Network $1,200 $2,100 10% 35% Co-payment $20 Office Visit Out-of-Pocket-Maximum In-Network Single $1,000 Multi-Party $2,000 Out-of-Network No Limit No Limit Prescription Drugs (Retail and Mail Order) Generic $7.50/script Brand $15/script Employees are provided a Health Reimbursement Account in the amount of $300 for a single coverage and $600 for multi-party coverage. Dental and limited vision coverage becomes effective the first day of the month following three years from the date of hire with full vision effective the first day of the month following five years from the date of hire. 24

25 Company Benefits (Entry-Level Employees) Group Life and Disability Insurance (GL&DI) Group Life and Disability Insurance (GL&DI) Ford provides hourly Entry-Level employees with life and disability insurance benefits. Coverage includes: Life Life Insurance ($45,000) Accidental Death and Dismemberment ($22,500) Post-Employment Life Insurance ($15,000) Post-Employment Accidental Death and Dismemberment ($7,500) Employees may also participate in optional employee-paid life programs. Disability coverage includes: Accident and Sickness Benefit (based on wage rates as of last day worked) Extended Disability Benefits (based on wage rates as of last day worked) Employees also may participate in the new optional long-term disability program. 25

26 Company Benefits (Entry-Level Employees) Tax-Efficient Savings Plan for Hourly Employees (TESPHE) Tax-Efficient Savings Plan for Hourly Employees (TESPHE) Employees covered by the Entry-Level agreement may participate in the TESPHE for their own savings on the same basis as Traditional employees. Additionally, the Company makes a retirement contribution (in lieu of a pension) to TESPHE each pay period based on the employee s hire date: Prior to Oct. 24, 2011: 6.4 percent of base hourly straight-time pay On or after Oct. 24, 2011: 4.0 percent of base hourly straight-time pay These monies may not be withdrawn until termination of employment. The Company also contributes $1 per eligible compensated hour to TESPHE for certain employees in lieu of post-employment healthcare benefits. These monies may not be withdrawn until age 59½ or termination of employment. 26

27 Company Benefits (Entry-Level Employees) Income Security Ford-UAW Supplemental Unemployment Benefit (SUB) Plan Entry-Level employees were negotiated into the SUB Plan during the 2009 contract modifications Provides a significant measure of income during layoff Eligible based on one year of service Types of SUB Benefits Regular Benefits generally for full weeks of layoff of an amount that, when added to state unemployment compensation, equals 74 percent of Weekly Before-Tax Pay. Duration of Regular Benefits (based on the 2009 contract modifications for the term of the 2011 Collective Bargaining Agreement, subject to seniority) during an indefinite layoff: o At least 1 year but less than three years of seniority = maximum of 13 weeks of SUB Regular Benefits o 3 year or more of seniority = maximum of 26 weeks of SUB Regular Benefits o For the length of a qualifying temporary layoff 27 Automatic Short Week Benefits for partial weeks of layoff of an amount that equals 80 percent of the employee s base hourly rate for hours of layoff in a workweek in which less than 40 hours are available to the employee Separation Payment is based on a scheduled number of hours of base pay and determined by the employee s seniority. It is paid in lieu of future SUB benefits

28 Other Company Benefits Legal Services Plan The Legal Services Plan terminated effective Dec. 31, Any application received on or before this date for covered benefits under the plan shall be processed to the conclusion of the matter. When the Plan was open, the UAW-Ford Legal Services Plan shared 63 law offices located across the country with UAW-GM Legal Services Plan and UAW-Chrysler LLC Legal Services Plan. The three Plans are managed by a common director and staff in cooperation with each company s Plan Administrative Committee. The director is managing the plan closure. Other Company Benefits Profit Sharing Plan Profit Sharing Plan The Profit Sharing Plan was first negotiated between Ford and the UAW in It provides a source of income for employees and allows them to share in the growth and success of the company. A simplified profit sharing formula was introduced with the 2011 Collective Bargaining Agreement. During the past four years, the Ford profit sharing amount averaged $7,550 per eligible employee per year (referenced next page). Eligibility Full-time U.S. hourly employees are eligible, including certain employees who are terminated during the year. Total Profit Share Determination Each year that company profits are generated, Ford will make profit sharing payments, as long as Ford s North American pre-tax profits exceed $1.25 billion for the plan year. The profit sharing amount is calculated based on North America profits on a pre-tax basis excluding special reconciling items that management reports to its shareholders. The formula generates an amount equal to $1 for every $1 million of North America pre-tax profit, not to exceed $12,000, for each eligible employee that is compensated for 1,850 hours or more within a given plan year. Individuals compensated less than 1,850 hours will generate a prorated contribution to profit sharing. The total profit sharing amount will then be distributed to individual participants based upon their individual compensated hours and the total compensated hours of all participants. 28

29 UAW Hourly Profit Sharing Payment History Plan Year Ford GM Chrysler 1983 $440 $ $1,993 $543 $ $1,262 $ $2,154 $ $3,760 $1500* 1988 $2,800 $266 $ $1,025 $ $ $1,350 $4, $4,000 $589 $8, $1,700 $824 $3, $1,800 $304 $7, $4,400 $750 $4, $6,100 $200 $7, $8,000 $1,775 $8, $6,700 $803 $ $160 $934 $ $195 $ $600 $186 $1, $ $ $5,000* $4,793 $ $6,200 $7,000 $1, $8,300 $6,750 $2, $8,800 $7,500 $2, $6,900 $9,000* $2,750 $30,200 $7,550 $30,250 $7,563 $9,000 $2,250 Memo: Memo: Four-year average * Includes element of discretionary payment 29

30 Other Company Benefits Ford Interest Advantage Ford Interest Advantage Ford Interest Advantage (FIA) was first offered to Ford hourly employees in The program is voluntary and allows employees, retirees and others to invest in demand notes issued by Ford Motor Credit Company. The program is administered by the Northern Trust Company in Chicago. Interest Rates Ford Interest Advantage features interest rate tiers and pays a minimum rate that is at least 0.25 percent above the seven-day average yield (non-compounded) for all taxable money funds as reported weekly in the Money Fund Report. Investments and Redemptions Employees may choose to invest in the program through payroll deductions with a minimum investment amount of $100 per month ($25.00 per week for hourly employees), and there are no transaction, administrative or management fees. There is a $1,000 minimum balance requirement. Employees also may elect to have all or a portion of any profit sharing award directed to their FIA note. Investments can be made by check and/or wire transfer. Interest is earned daily and automatically reinvested monthly, and funds may be invested or withdrawn at any time without cost or penalty. Free check writing privileges ($250 minimum) are available to all participants. Checks written for amounts less than $250 incur a fee of $0.25 per check. Investors can manage their investments online or through their mobile device. Ford Credit has filed a registration statement (including a prospectus) with the Securities and Exchange Commission relating to the offering of Ford Interest Advantage Notes. For more info, read the prospectus in the Registration Statement and the other documents Ford Credit has filed with the SEC. The documents may be obtained free of charge through EDGAR on the SEC website. Alternatively, Ford Credit will send you a prospectus upon request by calling (800)

31 Other Company Benefits New Vehicle Purchase/ Red Carpet Lease Plans New Vehicle Purchase/Red Carpet Lease Plans The New Vehicle Purchase Programs (AXZD-Plans) are offered to eligible individuals to buy or lease certain new company products from authorized Ford Motor Company dealers at special prices. The following people are eligible to participate in the plans: 31 All active, full-time hourly employees and regular salaried employees, beginning with their date of hire All hourly retirees receiving normal, early (regular or special), or disability retirement benefits while any medical benefits are being received Salaried retirees who retired under the General Retirement Plan, including salaried employees who terminate between the ages of 50 and 55 and who are eligible to receive certain deferred retirement benefits Surviving spouses of employees who died while actively employed, and surviving spouses of retirees who retired under the General Retirement Plan, or who are receiving benefits under the UAW-Ford Retirement Plan Employees on an approved leave of absence, for the duration of the leave or until expiration of medical benefits Employees on layoff, for the first 12 months of the layoff All regular part-time hourly and salaried employees who are eligible to receive medical benefits Deferred vested retirees who are receiving a Ford pension Members of the immediate families of the preceding eligible employees, retirees, and surviving spouses. Immediate family includes the spouse, sons and daughters (including in-laws and stepchildren), brothers and sisters (including in-laws, half- and stepbrothers and stepsisters), parents, spouse s parents, grandchildren, grandparents, spouse s grandparents, same-sex domestic partners of eligible active employees covered under the healthcare plan, and immediate family members of eligible samesex domestic partners

32 Special Programs Diversity, Education, Development and Training Program Diversity in the Workplace Although Equal Application of the Agreement has been a part of the UAW-Ford Collective Bargaining Agreement for decades, in 1999 the parties agreed to a new Diversity in the Workplace initiative. This new Letter of Understanding established a National Joint Diversity Committee. In 2007, the parties recognized the desirability of increased communication and cooperative efforts in holding discussions of the Joint Equality and Diversity Committees at both local and national levels. More specific roles of committees at both levels were outlined to better clarify expectations of committee members. National Joint Equality and Diversity Committee advises and counsels local committees, develops and provides training for local committee members; reviews, discusses, and recommends ways to facilitate awareness of equal application, diversity and sexual harassment issues as well as other strategies to increase employee awareness of and promotes constructive dialogue regarding equality and diversity. Local Joint Equality and Diversity Committees shall be advisory, consultative and cooperative and keep the National committee apprised of issues arising at the local level. Education, Development and Training Program The Education, Development and Training Program (EDTP) was established as a key element of the 1982 Collective Bargaining Agreement. In subsequent years, the scope of EDTP evolved to accommodate additional program content. In early 2009, some program features were suspended or modified due to the financial constraints faced by the Company. The basic program objectives of EDTP have remained the same and include (1) to provide training, retraining and developmental opportunities for both active and displaced employees, (2) to support local and national UAW-Ford learning initiatives and other joint activities as agreed by the parties, and (3) to provide opportunities for the exchange of ideas and innovations with respect to employee development and training needs. Program activities are coordinated by an on-site Employee Education Representative with direction provided by the UAW-Ford National EDTP Department. A Joint Governing Body, composed of five UAW and five company representatives, directs the operation of the program and the UAW-Ford National Programs Center. Housed in an independent facility since June 1983, the National Programs Center blends the talents of a staff recruited from the UAW, Ford and independent professionals. The National Programs Center relocated to the former Veterans Memorial Building at 151 West Jefferson in Detroit, Michigan, during This new facility consolidated joint program activities to a single site. Funding for joint program activities and the National Programs Center is provided for in the Collective Bargaining Agreement. The funding accrual is 10 cents per hour worked plus a sliding scale of $1.25 to $5 per hour for overtime hours worked in excess of 5 percent of straight-time hours. For health and safety training, an additional 4 cents per hour worked is contributed to the national fund. Additionally, 5 cents per hour worked at each location is designated for Local Training Funds. These funds provide local unions and local management resources for special training and employee development projects that meet their particular needs. 32

33 Programs for Active Employees The Education and Training Assistance Plan (ETAP) provides prepaid tuition and compulsory fees (up to a maximum of $5,000 per year) for selected and approved education and training classes for credit and degree courses at eligible educational institutions. Up to $200 may be used to purchase books for approved ETAP courses. The Personal Development Assistance (PDA) plan provides employees the opportunity to take classes to enhance their professional or personal development in the workplace. The annual allotment is $2,200, which counts toward the overall $5,000 per year tuition assistance program mentioned above in ETAP. Programs for Inactive Employees The Retired Employee Tuition Assistance Plan (RETAP), agreed to by the union and company in 1996 negotiations, provides up to $1,750 per calendar year to retired employees who wish to participate in approved education classes on site at the local union hall or plant location from which they retire. The National Vocation Retraining Assistance Plan (NVRAP) provides ETAP benefits for seniority employees on indefinite layoff. In 1999, the UAW and Ford increased NVRAP assistance by $400, resulting in a new range of $6,400 to $8,400 in assistance, depending on seniority. 33

34 Special Programs Employee Support Services Program UAW-Ford Employee Support Services Program (ESSP) First negotiated in 1984 as the Employee Assistance Plan and Child Care Resource and Referral Service, the ESSP was expanded in 1990 to include Health Promotion and Fitness components. The various features of ESSP are administered at the plant level by full-time UAW ESSP representatives and by salaried representatives. The services of ESSP are available to employees without cost, and participation in the various program components is voluntary. Funding is provided through the UAW-Ford National Programs Center. In 1993, ESSP was further expanded to include Behavioral Emergency/Critical Incident Stress Debriefing procedures (BE/CISD) to help address violence and other behavioral emergencies in the workplace. As a result of BE/CISD, U.S. Ford manufacturing locations have established trained Local Response Teams to assist in maintaining a safe and stable work place. Critical Incident Stress Debriefing plays a major role in assisting employees impacted by critical workplace incidents. The 1996 negotiations expanded opportunities for professional development for the local ESSP representatives with new initiatives, such as the development of National Program Standards and the establishment of annual ESSP representative training. Additionally, training of supervisors/uaw-committeepersons in early intervention procedures, as well as employee support groups, has been added to address workplace issues. To improve the ease of utilization by employees, the child care and elder care components were also consolidated under the designation Family Consultation and Referral Services. In 1999 negotiations, the ESSP programs were elevated in their contractual status by elimination of the various Letters of Understanding under which they had previously operated and incorporated into Volume I of the Agreement as Appendix U. Selected new initiatives for the 1999 Agreement include addition of a Dependent Care Assistance Program (DCAP) to help employees pay for child and elder care with before-tax dollars under certain circumstances; a geriatric assessment component added to the Family Consultation and Referral Program; facilitated professional development of the local ESSP representatives; and mentoring opportunities for newly appointed ESSP representatives. Although some programs were discontinued as a result of 2007 negotiations, the core Employee Assistance program continues to provide important support for UAW-represented Ford hourly employees and their dependents that are dealing with difficult personal issues. Employee Assistance Plan (EAP) At the core of ESSP is the Employee Assistance Plan, which helps UAW-represented Ford hourly employees and their immediate family members deal with substance abuse, emotional illness or other serious personal problems. Outside trained and licensed professionals provide expert and confidential problem assessment and therapy. Referrals for specialized care are provided, as necessary. The EAP also provides support for the ongoing Behavioral Emergency/Critical Incident Stress Debriefing (BE/CISD) procedures in the manufacturing locations. Training on "Recognition of EAP Problems, and Early Intervention Strategies" for all supervisors/uaw-committeepersons at all U.S. Ford manufacturing facilities was made available. 34